The company David Callan has been buying shares for a long-term
investment is
Identiv (
INVE
),
which he considers a well-executed turnaround story in the
making.

Identiv is a technology company that focuses on developing
products to provide secure identification. These products include
radio frequency identification, smart card-based security,
cloud-based service delivery, and near-field communication.

Top-Notch Management

Callan has informed us that he is giving his support to the
current CEO and board of directors. He personally informed me that
"Identiv has the most impressive CEO I have come across in years."
Hearing this from Callan is certainly strange for me as he normally
deals with poor management and CEOs. Most of the time he
successfully ousts or forces these groups to sell their respective
companies because of poor execution that costs shareholders a lot
of capital and heartache.

Callan has been in contact with Identiv and its new CEO, Jason
Hart, watching closely as he orchestrates a major overhaul of
Identiv to position the company for future growth and success.
While this company is outside of the medical device field that
Callan typically focuses on, recognizing strong management and
solid growth platforms are commonplace for him.

When it comes to investing in a small-cap company, the first
rule we live by is "bet on the jockey before betting on the horse."
Like Callan, we are most impressed with Jason Hart, who is the kind
of jockey we bet on. In fact, Hart chose not to press release the
company's partnerships with
Verizon (
VZ
)
, but rather spoke of this development on Identiv's last earnings
call from
Quarter One, 2014.

The details of the Verizon deal are not fully known. There is a
likely reason for this: Many large companies simply do not want
potential criminals to know exactly what type of security they are
using to protect their infrastructure. Also, Verizon may have
requested the details of this deal not to be made public.

Additionally, we were impressed with the call and felt Hart was
clear and precise on what his management team has been doing to
ensure current and future company success.

Callan Building a Position in Identiv

Callan recently spoke with CEO Jason Hart along with Chief of
Staff ((
COS
)) Lennart Streibel, and described this conversation as possibly
one of the best calls he has ever had with a public company. In
fact, he informed us it was the first time in years he actually
enjoyed listening to management because of its quality versus the
excuses that he hears regularly from companies with poor
management.

Hart and his team have been consolidating and integrating what
used to be 37 businesses (many from acquisitions) into one elite
and streamlined company with a clear focus - a sign of good
management. Callan feels that Hart and his team are executing at
levels that even exceeded his expectations and stated to us:

What Jason and his dedicated team have accomplished in such
a short time is frankly astounding. They are making all the
right moves as I see them, and executing without hesitation.
The accomplishments to date would have taken most companies two
years and yet Identiv has been able to do it in less than half
that time. All the while, they are growing segments of the
business they see as strategic to the tune of 36%
year-over-year in the last quarter. This company has the right
products and technology, the experience, the right leadership,
and most importantly, all at the right time.

Following his last call with the company, Callan told us he
instructed his broker to "keep buying shares until his arm hurt."
So, again Callan is amassing a sizable position for himself in a
company. This time it's not to apply pressure to get a company to
sell, but rather to be a long-term investor.

We have been doing our own research and due diligence on Identiv
and we like what we see. It is clear that Opus Bank likes what it
sees as well considering it has recently extended a $20M round of
financing that carries an interest rate of almost half the previous
facility. Mr. Hart has adopted a single-focused strategic
initiative in this turnaround and has kept most of the story out of
public eye in terms of "promoting" Identiv stock.

Hart has been consolidating Identiv divisions into a more
streamlined approach which include, but are not limited to:

A better liquidity position in lieu of a $20 million credit
facility with Opus Bank.

Selling non-core assets.

Partnerships with
Verizon
and, "the largest security distributor in the U.S.," that are
centered on a single core business theme, "
Trust
Your World
."

An example of how Hart and his team have been executing the
"Trust Your World" theme has been by bringing product awareness to
the marketplace and
engaging workshops
that are designed to educate potential clients on cyber security
issues the world is facing today and in the future. This is a
cost-effective way for Hart to both land clients and bring name
recognition for Identiv. Far too many small-cap public companies
give too much weight to stock price over business execution by
overemphasis in stock promotion.

Companies with management that engage in stock promotion mainly
focused on its price per share often tend to fail in executing its
core business initiatives, which is a constant theme we see over
and over again. We know that if management has good product and
promotes it correctly as we believe Hart has been doing, stock
price appreciation will follow suit in time.

Hart is expected to begin meeting with the institutional
investment community in the third and fourth quarters, which tells
us that this company and stock are ready to hit the radar of many
market participants. We want to get out in front of this story and
put our reputation out there because we believe Identiv has large
potential. With its current valuation, we feel the company offers
investors who are willing to take the risk on a small-cap company
the opportunity to see Identiv turn into a larger cap company over
time.

The corporate changes being made late in 2013 and 2014 are
staging the company for significant upside potential in the years
to come. Landing a deal with companies like
Verizon
and focusing on OEM contracts with major players should just be the
beginning of success for Identiv.

I tell you, this thing is big. Why, only the other day, an
outfit called
IDC said
that the
IoT
is going to generate a staggering $7.1tn in sales by 2020. No,
that's not a misprint: I meant
trillions
.

Hart is positioning his company to capitalize on the buzz as it
is uniquely positioned to deliver "trust" to the Internet of Things
with its new "
Trust your
World
" vision that focuses on delivering solutions for the
rapidly-expanding connected world.

For instance, Identiv is focusing on such IoT opportunities as
near-field communication ((NFC)) technology. NFC is a set of
standards for smartphones and similar devices to establish radio
communication with each other by touching them together or bringing
them into proximity, usually no more than a few inches.

NFC offers a low-cost and secure way to allow sensors and
inlayed stickers to be connected to the Internet, even if only
for a moment. What is key, here, is implementing a trusted
identity within those sensors.

As the demand for low-cost sensors in the NFC world continues
to grow exponentially, the need to manage, secure and interact
with them will only become more challenging. It is absolutely
necessary to have a simple, secure, low-cost solution to deploy
and manage that identity, while maximizing the value that the IoT
can bring to the world.

Such examples would be
systems that include a mobile app
based on the NFC platform that provides real-time information about
a business' inventory. If inventories are running low, a business
will know exactly how much inventory is left, and how quickly those
inventories are dwindling so that a business can re-order when
needed - all in real time.

Identiv is focused on three main areas: Trust Solutions for
Premises, Trust Solutions for Information, and Trust Solutions for
Everyday Items. Its platform for delivering these solutions is
Identiv Trust Services (ITS).

Such trust services include UHF and HF RFID tags for use in
asset identity-management systems across a broad spectrum of
industries, such as retail, logistics and healthcare, to name but a
few.

For instance,
eBay's (EBAY)recent data compromise
of up to 145M customers, who were then asked to change their
passwords as a precautionary measure. While eBay stated that no
customer information was compromised, the very thought to hackers
being able to potentially access customer critical data is
alarming.

The future of IoT will encompass users moving away from simple
passwords and toward a more integrated and streamlined identity
management system. If such a system was in place for eBay, it's
likely this attack and potential data compromise would have not
taken place. Identiv seeks to in part provide service toward this
end.

The above is just a small fraction of the IoT field, so we can
see why some analysts believe the market will be in excess of $7
trillion by 2020. If Identiv can manage a meager 1% market
penetration, it could then realize a substantially higher market
cap moving forward,
potentially
in the billions. It's really simple math here. What is not simple
is actually getting the job done. We feel that with good
management, Identiv can at least realize a modest market
penetration.

Apple (
AAPL
)
most recently came forward with its push into the Internet of
Things space by introducing Apple Homekit. Homekit acts as an
Internet of Things platform, creating a common interface for
developers to securely integrate a wide range of home control
functions like lights, thermostats, appliances, locks and other
devices through the iPhone or iPad and even with Siri.

We believe "the Internet of Things" is the next trend that
investors will take notice of. The big players in the tech industry
have already started consolidating assets for this trend. Apple has
partnered with Texas Instruments (TXN) and Philips (PHG) to work on
in-home automation and security. Google ([[GOOG]], [[GOOGL]]) also
acquired Nest Labs for
$3.2B
earlier this year.

As this trend catches on, we believe Identiv will be attractive
to bigger money investors over time.

Due to previous management acquisitions, Identiv has a wide
array of products. New management has consolidated and streamlined
this profile so that the company can become profitable. As
mentioned, large companies like Verizon have signed contracts with
Identiv and others are sure to take notice. Although it's very
early in its journey, we believe that the new management team is
positioning the company correctly for future growth. With a market
cap under $100M, there is good room for share appreciation.

Investing in companies before they become a trending topic is
how the biggest gains are made in the stock market. We have seen
companies in different sectors do well this year as the sectors
they are involved in have gained attention.

For example, in 2014, the energy sector has been receiving a lot
of attention. One company that has been in the headlines quite a
bit lately has been
FuelCell Energy (FCEL)
. FuelCell is working to develop alternative energies that are
economically and environmentally friendly. The technological basis
here is the fuel cell. A fuel cell uses chemical energy and
converts it into an electrical output. The advantage to these fuel
cells is that they are supposed to produce more sustainable energy
and reduce our carbon footprint.

FuelCell Energy installs and operates fuel cell plants. It
manufactures several variations of the batteries and claims its
solution is more efficient and ultra clean. FuelCell is highly
speculative, but there is no denying that it has gained major
investor attention. FuelCell Energy traded as low as $1.30 early
this year and rallied to $4.74 in early March. The company may or
may not be successful in the long term, but those who identified
the energy and alternative energy trend early made huge
returns.

We get many emails on a daily basis asking us to check out
companies that they claim is the "next big thing." Just about every
company brought to our attention either has poor management, poor
financial structure, poor product, and other variables that do not
inspire our interest.

Identiv is clearly under the radar and is just beginning to
capitalize on the IoT trend. We see similar upside for Identiv that
FuelCell Energy had earlier this year in terms of stock
appreciation, but with stronger appreciation over the long
term.

Undervalued and Under the Radar

As it stands today, Identiv trades at a market cap below this
year's projected sales of $80-90M which we feel is too low of a
valuation. Typically, valuations are low because growth is
declining, management is failing, or the sector is being phased
out. We see the exact opposite with Identiv. The company is well
positioned, the market is emerging, and is well managed by Hart and
his management team.

Risk/Reward Profile For Long-Term Investors Is
Favorable

Obviously, as with any small cap company, Identiv can fail. But,
with Hart captaining the ship, we feel the company will be largely
successful in time. Additionally, we feel it's likely that when
Hart meets with Wall Street firms in the 3rd and 4th quarter of
this year, the company will gain support from many of them.

We aren't looking at Identiv as simply a short-term or mid-term
trade. We have taken a long-term position in the stock and plan to
see it through, unless something much unexpected happens.

However,
nothing is guaranteed
, especially when it comes to small-cap companies. Hart could
misstep and get too aggressive with cuts and not focus on enough
growth. The company can also get irresponsible with its cash
position, and it also may not focus enough on making sure its
products are up to industry standard compliance.

While we do not believe this will happen, we feel we must point
out this possibility as other companies in the past who have had a
lot of promise simply blew it and failed.

Conclusion

We, along with Dave Callan, hope to enjoy the ride in the years
to come from Identiv because we believe IoT is where the largest
potential will be realized while CEO Hart agrees. The company is in
a good position to gain partnerships with some of the biggest
players in the business. It ultimately would not surprise us if one
of the industry giants would acquire Identiv down the road as to
avoid its supply chain from being interrupted or as a strategy to
disrupt competitors' dependence on the same technology. However, we
do not see an acquisition any time soon. When and if an acquisition
does occur, it would likely be at least a couple of years down the
road.

With David Callan on board, we have to believe that if company
management ever engages in activity that is not beneficial to the
shareholders, he and his attorneys will be there, demanding the
exploration of strategic alternatives. For now, he is extremely
content to sit back and not make it his job managing those who run
the company. Callan thinks Jason Hart and his management team will
take this company and its shareholders to extreme prosperity in
time and as indicated to us, he is in Identiv for the long
haul.

As CEO Hart remarks on the company's Q1 2014 earnings call,
"It's going to take a few quarters," meaning new management will
need a bit of time to undo the mess the former team left behind. So
far, Hart and his associates are ahead of schedule.

The new senior management team came into place late last year,
replacing all of Identiv's prior senior management along with the
laying off 140 employees designed to "cut the fat." We like the
initial moves Hart has implemented with Identiv, and even more so,
we like his vision of consolidating the company's assets into a
one-core business model under the premise of IoT.

As we mentioned prior, we also like the fact that Hart is not
engaged in stock promotion. This is evident by the company not
press releasing key partnerships, most notably the Verizon one
mentioned on the Q1 2014 earnings call.

We see far too many small-cap companies promoting their stock
with a lot of hyped up expectations. These companies oftentimes
become addicted to the hype, and frequently lose focus on actually
executing core business fundamentals properly to realize these
expectations.

Identiv's Hart is focusing on execution and results, versus
hyped up stock promotion. Bigger and smarter money investors want
to see this first and foremost, so we believe Hart will be
successful in his meetings with bigger firms come the 3rd and 4th
quarter of this year.

IoT is projected to be a 7 trillion-plus market by 2020, and all
Identiv needs is a tiny percentage of this market to eventually
achieve a multi-billion dollar market cap over time. The company
has the right products to capitalize on IoT, but more importantly,
we feel it has the right management to get the job done.

We believe patient investors with vision and perseverance will
be handsomely rewarded here in the long term.

Disclosure:
The author is long INVE. The author wrote this article themselves,
and it expresses their own opinions. The author is not receiving
compensation for it. The author has no business relationship with
any company whose stock is mentioned in this article.

Additional disclosure:
Disclaimer: This article is intended for informational and
entertainment use only, and should not be construed as professional
investment advice. They are my opinions only. Trading stocks is
risky - always be sure to know and understand your risk tolerance.
You can incur substantial financial losses in any trade or
investment. Always do your own due diligence before buying and
selling any stock, and/or consult with a licensed financial
adviser.